The End of Economic Growth Is Inevitable. Let’s Plan for It.
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Both the U.S. economy and the global economy have expanded dramatically in the past century, as have life expectancies and material progress. Economists raised in this period of plenty assume that growth is good, necessary even, and should continue forever and ever without end, amen. Growth delivers jobs, returns on investment, and higher tax revenues. What’s not to like? We’ve gotten so accustomed to growth that governments, corporations, and banks now depend on it. It’s no exaggeration to say that we’re collectively addicted to growth.
The trouble is, a bigger economy uses more stuff than a smaller one, and we happen to live on a finite planet. So, an end to growth is inevitable. Ending growth is also desirable if we want to leave some stuff (minerals, forests, biodiversity, and stable climate) for our kids and their kids. Further, if growth is meant to have anything to do with increasing quality of life, there is plenty of evidence to suggest it has passed the point of diminishing returns: Even though the U.S. economy is 5.5 times bigger now than it was in 1960 (in terms of real GDP), America is losing ground on its happiness index.
So how do we stop growth without making life miserable — and maybe even making it better?
To start with, there are two strategies that many people already agree on. We should substitute good consumption for bad, for example using renewable energy instead of fossil fuels. And we should use stuff more efficiently — making products that last longer and then repairing and recycling them instead of tossing them in a landfill. The reason these strategies are uncontroversial is that they reduce growth’s environmental damage without impinging on growth itself.
But renewable energy technology still requires materials (aluminum, glass, silicon, and copper for solar panels; concrete, steel, copper, and neodymium for wind turbines). And efficiency has limits. For example, we can reduce the time required to send a message to nearly zero, but from then on, improvements are infinitesimal. In other words, substitution and efficiency are good, but they’re not sufficient. Even if we somehow arrive at a near-virtual economy, if it is growing, we’ll still use more stuff, and the result will be pollution and resource depletion. Sooner or later, we have to do away with growth directly.
If we’ve built our institutions to depend on growth, doesn’t that imply social pain and chaos if we go cold turkey? Perhaps. Getting off growth without a lot of needless disruption will require coordinated systemic changes, and those in turn will need nearly everyone’s buy-in. Policymakers will have to be transparent with regard to their actions, and citizens will want reliable information and incentives. Success will depend on minimizing pain and maximizing benefit.
The main key will be to focus on increasing equality. During the century of expansion, growth produced winners and losers, but many people tolerated economic inequality because they believed (usually mistakenly) that they’d one day get their share of the growth economy. During economic contraction, the best way to make the situation tolerable to a majority of people will be to increase equality. From a social standpoint, equality will serve as a substitute for growth. Policies to achieve equity are already widely discussed, and include full, guaranteed employment; a guaranteed minimum income; progressive taxation; and a maximum income.
Meanwhile we could begin to boost quality of life simply by tracking it more explicitly: instead of focusing government policy on boosting GDP (the total dollar value of all goods and services produced domestically), why not aim to increase Gross National Happiness — as measured by a selected group of social indicators?
These are ways to make economic shrinkage palatable; but how would policymakers actually go about putting the brakes on growth?
One tactic would be to implement a shorter workweek. If people are working less, the economy will slow down — and meanwhile, everyone will have more time for family, rest, and cultural activities.
We could also de-financialize the economy, discouraging wasteful speculation with a financial transaction tax and a 100 percent reserve requirement for banks.
Stabilizing population levels (by incentivizing small families and offering free reproductive health care) would make it easier to achieve equity and would also cap the numbers of both producers and consumers.
Caps should also be placed on resource extraction and pollution. Start with fossil fuels: annually declining caps on coal, oil, and gas extraction would reduce energy use while protecting the climate.
Altogether, reining in growth would come with a raft of environmental benefits. Carbon emissions would decline; resources ranging from forests to fish to topsoil would be preserved for future generations; and space would be left for other creatures, protecting the diversity of life on our precious planet. And these environmental benefits would quickly accrue to people, making life more beautiful, easy, and happy for everyone.
Granted, we’re talking about an unprecedented, coordinated economic shift that would require political will and courage. The result might be hard to pigeonhole in the capitalist-socialist terms of reference with which most of us are familiar. Perhaps we could think of it as cooperative conservatism (since its goal would be to conserve nature while maximizing mutual aid). It would require a lot of creative thinking on everyone’s part.
Sound difficult? Here’s the thing: ultimately, it’s not optional. The end of growth will come one day, perhaps very soon, whether we’re ready or not. If we plan for and manage it, we could well wind up with greater well-being. If we don’t, we could find ourselves like Wile E. Coyote plunging off a cliff. Engineering a happy conclusion to the growth binge of the past century might be challenging. But it’s not impossible; whereas what we’re currently trying to do — maintain perpetual growth of the economy on a finite planet — most assuredly is.
Richard Heinberg is the author of 13 books and a senior fellow with the Post Carbon Institute. His essays and articles have appeared in print or online at Nature, Reuters, The Wall Street Journal, The American Prospect, Public Policy Research, The Quarterly Review, Resilience, The Oil Drum, and Pacific Standard, among other publications.
This piece was originally published on Ensia, a nonprofit media outlet published by the Institute on the Environment at the University of Minnesota.
Comments are automatically closed one year after article publication. Archived comments are below.
While on the topic of sustainable growth, thought I would add the following link, nothing bugs me more then when people call renewable energy good for the environment.
https://news.nationalgeographic.com/news/energy/2014/11/141111-solar-panel-manufacturing-sustainability-ranking/
The two economic systems we have tried on industrial scale – Soviet Communism (failure to consider both resource and capital constraints) and Market Capitalism (misplaced belief in the fungibility of capital and labour for material resources) have been environmental catastrophes.
The market economy, in particular has no concept of ecology, and ecology pays no heed to procedural fairness, and that makes the two fundamentally incompatible (you could imagine trying to “price in” the entirety of environmental impact, it would require an immensely powerful enforcement regime – yet we can’t even tax multinational corporations properly, a far simpler challenge).
The good news is, absolute procedural fairness is also incompatible with human psychology, (which, for example, is insensitive to time integral, considers loss more meaningful than gains, and treats poverty as extrinsic and temporary), so the political economy we replace it with will provide much higher quality of life, even for those it makes materially less wealthy.
There are a couple of things we need to reckon with. One is that capitalism must grow or descend into crisis. So if you want to end growth, you first have to end capitalism — not so easy, but worth the effort. Secondly, we in the advanced countries plainly have too much. But most people on the planet have too little — too little water, sanitation, work, money. We need also to think about how to include them in a no-growth world. I’m not optimistic.
What? You mean that we humans should not grow exponentially in an ever-diminishing-resources planet? We can’t have any number of children WE want? We can’t keep raping and destroying nature out of its last resources? We can’t produce water, food, jobs, housing, entertainment, fuels, clear air and lands in an EXPONENTIAL manner for EVERYONE?
Ha!.. The heck with you. It’s my god-given right to consume as *I* want and have as many children as *I* want. Ignore the famines elsewhere, the misery of joblessness, lack of housing, expensive fuels, fouled air, extinct animals, deforestation, fouled seas, desertification, climate change, etc., etc. etc. This will be the next generation’s problems. This is somebody else’s problem NOT MINE.
This growth based capitalism is rooted in the sick mind of Milton Friedman. The person who is directly responsible for destroying several countries and thousands of lives. He argues that greed is the drive for growth and we should embrace that which is a bullshitargument.
This is a fine and important article. I only wish Richard would have identified the sustainable alternative: the steady state economy with stabilized population and ecological footprint. Perpetual growth isn’t sustainable, and perpetual degrowth (or “shrinkage”) certainly isn’t. That leaves the steady state economy.
And yes by now American and other fat economies are almost certainly already too big for long-term maintenance, which means we do need a period of degrowth to get back down to a sustainable steady state. But as we like to say at CASSE (www.steadystate.org), it’s one paradigm shift at a time. It will be the accomplishment of the 21st century to replace the nearly universal aspirations of GDP growth with “steady statesmanship” in national politics and international diplomacy. In the advanced stages of steady statesmanship, coordinated degrowth (always to be recognized as temporary) will be feasible.
Readers who want to help in this transition can start by signing the CASSE position on economic growth. (Richard and many other leading sustainability thinkers are among the 14,000 signatories.) And for details read Supply Shock: Economic Growth at the Crossroads and the Steady State Solution. That’s where you’ll find the basics of the Full and Sustainable Employment Act, or the “Full Seas Act” establishing the steady state economy as macroeconomic policy from the supply side and calling for steady statesmanship emanating from the USA.
This is a fine and important article. I only wish Richard would have identified the sustainable alternative: the steady state economy with stabilized population and ecological footprint. Perpetual growth isn’t sustainable, and perpetual degrowth (or “shrinkage”) certainly isn’t. That leaves the steady state economy.
And yes by now American and other fat economies are almost certainly already too big for long-term maintenance, which means we do need a period of degrowth to get back down to a sustainable steady state. But as we like to say at CASSE, it’s one paradigm shift at a time. It will be the accomplishment of the 21st century to replace the nearly universal aspirations of GDP growth with “steady statesmanship” in national politics and international diplomacy. In the advanced stages of steady statesmanship, coordinated degrowth (always to be recognized as temporary) will be feasible.
Readers who want to help in this transition can start by signing the CASSE position on economic growth. (Richard and many other leading sustainability thinkers are among the 14,000 signatories.) And for details read Supply Shock: Economic Growth at the Crossroads and the Steady State Solution. That’s where you’ll find the basics of the Full and Sustainable Employment Act, or the “Full Seas Act” establishing the steady state economy as macroeconomic policy from the supply side and calling for steady statesmanship emanating from the USA.
The Fermi Paradox – Where is everybody? I always come back to this statement when I read or hear discussion about economics and human civilization and what we need to do. Every action taken by our species on this planet is in service of one thing: catering to the secretion of hormones in a bag of electricity and water we call the human body. We emote. We cry and laugh. We fight and hurt. We do terrible things in the name of getting more for ourselves. All because our body system is a response to fear and environmental changes.
The universe doesn’t care whether we exist, nor does time and space. We are a specific set of biological and physical factors that manifests as a requirement for a particular set of variables to exist and maintain that existence. Any non-cognizant entity, rocks or rivers for example, have never started wars or an economic system, committed a murder or harmed another. This is unique to cognition entwined with biology. Whereas RNA sequencing is the basis for biological development, emotional need is the basis for every malady we have ever, and will continue to face.
I am not against human emotion in any way. Love and memorable experiences are intrinsic to our biology and because we are what we are, I would never want to take that away from our condition. However, like the old saying goes, guns don’t kill people, people kill people. As long as we remain the form we take, we will always succumb to base brain actions and desires. Not to steal from anyone, but it has been said that, for a long time we thought the limbic system was governed by the cortex, but we now know that the reverse is true. That, combined with a limited memory and each successive generations requirement of learning from the ground up results in a consistent set of terrible actions, mental health conditions, and physical ailments.
I believe the best shot we have as a species is to transfer consciousness into a synthetic version of ourselves. I know that sounds unemotional and insensitive. I promise you I am not trying to be anti-human or a non-caring individual who is out to get humanity. But the more I think about things, the more it seems the most most “humane” way forward. Louis CK once said “The number one thing preventing murder, is the law against murdering.” Throughout most of humanity, murder was a fact of life without repercussions. Law is important, but only in an existence where biological, and hence physical harm can be done. I once read someone was asked what a law was. The response stayed with me. “A law is contrivance in absence of a solution to a problem.” There is no law against breathing for example. In the absence of conflict, there is no need for a law. Such a thing doesn’t even exist until a conflict is revealed. When conflict arises and there is no solution to the problem, so we simply invent something that says “Don’t do it, or else.”, hence pay or perform in the legal system upon conviction.
We generally don’t care that most beef is produced by the electrocution of cows, or that we eradicate other species entirely, or that we “enjoy” a portion of our possessions based on child or slave labor conditions. The fundamental point I’m trying to make is that in the absence of biological emotion, all these things disappear. Court systems, academics, economics, global warming, politics, corporations, disease, war, famine, everything contingent upon biology….gone.
So it’s my opinion that the greatest endeavor we can make as a species is to support and invest in technologies allowing for such a transition. As we merge with digital, every possibility is available. We could emulate our current existence without any of the aforementioned maladies and conflicts. As a species, we have by any measure, just shown up on the cosmological stage. Fermi Paradox – where is everybody?……..The best answer I’ve come across is, the reason we can’t find anyone out there is because intelligence doesn’t expand into the universe, it contracts into digital. It moves inward, not outward. And once intelligence is digitized, all answers and possible outcomes are simultaneously understood, contrived and executed. Artificial intelligence has been stated as the last invention of humanity. AI and Moore’s law shows we will be digital versions of ourselves within 100 years.
I don’t see global economic system remedy, or planet saving as something that will come to fruition. The pace of technology will outpace the need to do so. I see that possibility in my lifetime. Things look to me, the same as the RIAA being blindsided by the invention of the DVD burner and peer to peer software. Whereas certain technologies become an industry disruptor…….AI and the digitization of human cognition will be a humanity disruptor. When it happens, and the option to opt out of biology takes hold, the transition will happen quicker than biological systems can fathom and will be replaced exponentially rather than linearly. The advent of AI is the precursor to, and catalyst for this exponential change. I say within 50 years this option will be present. Ray Kurzweil says by as early as 2029. I used to disagree, but the pace of AI, as a byproduct of ever growing exponential creation of it’s own system, will, I believe, make this a reality.
The future isn’t economics for profit and tending to that desire for the warm feels in your belly. It’s everything and anything, simultaneously. It’s infinite knowledge and realities. It does not eliminate human existence or the ability to feel per se. But it will enhance in ways that have nothing to do with biological constraint or strife. I see planet earth void of life in it’s current form within no more than 500 years. Literally no intelligent life outside lower life forms. There would be no need for a giant rock, filled with genetic disposition, hovering in 4 dimensional space-time any longer. All things transferred to a ray of light, or whatever form is possible that we simply cannot comprehend with our limited, emotionally driven, limbic system dominating existence.
This article and the corresponding arguments (mine included) seem so elementary in comparison to such a realization. We are still knuckle dragging bags of water and electricity looking for the dopamine hit. I truly believe the “answer” is digitization of human cognition. But, and this is my entire point….the universe doesn’t care if this happens or is true. It is only important to a species that wants to exist. George Carlin said “The planet doesn’t need saving. The planet is fine. It’s us that’s screwed.” So any endeavor is only the result of our biological condition desiring more of something, or less of something else. There’s no fundamental right in this, nor is there any meaning to it. It just is. We “feel” there is more in all of this because our glands secrete molecules driving an urge to have meaning and reason and purpose. But that’s not the universe’s concern. The universe doesn’t know what that word even means. That word, as with all others, is tied to biology. We are just a bunch of flesh on a rock in space. Digitization is not some magical, predetermined destiny for humanity. It’s just like anything else that evolves to a higher system. Like genes to consciousness. There is nothing special about us. Our narcissism and sense of purpose isn’t relevant. This is about keeping some sense of cognition about natural processes. Nothing more.
I love a sunset, music, the warmth of another human I have intense feelings for, my children, my future. I AM human. I DO feel. This is my design. I just feel we can experience that and so much more when the constraints of biology are superseded, without suffering or worrying about how to keep such a fragile, cognitively limited, genetically driven entity alive and ever seeking of the dopamine hit that satisfies the limbic portion of our cognitive ability. I’m am not trying to be wordy, pretentious, or right. This is just my opinion, and I love hearing others opinions because I love to learn. I am always open to new ideas and an ever changing perception of reality, but again….all of this is only because my biological system wants to feel ‘yummy’. And unfortunately, with that comes all the bad things we’ve had throughout humanity as well. This article, like every other before it, is the result of a biological system. We need to move past this to survive. And if you think about it, to simply say I’m non-feeling towards humanity or just want to become some transhumanist or such….we are at the point where genetics is manipulated and altered through CRISPER-CAS9. AI will be the greater and more pervasive intelligence on this planet within 20 years, and we will beg to a part of the greater knowledge and immortality that comes with the mergence of our cognition with it.
Don’t think so? Throw your phone out. I dare you. It is a part of you and you won’t go without it. When the option of immortality and infinite knowledge is placed in your lap, the vast majority will take part, and the rate of change will accelerate off the page. I feel those things we call dollars should be used as an instrument to fund the ability to no longer need it in the first place. We are what we are, for now, so why not use that virtual instrument we created, to eliminate it’s necessity and the harm caused in it’s name, once and for all. Seeing what is possible makes me sad that we are still constrained and so limited in scope of awareness. The future of humanity isn’t bright or amazing. It is all things simultaneously. We just can’t conceptualize such a thing yet. The universe isn’t seeking answers….we are.
Next — “I believe the best shot we have as a species is to transfer consciousness into a synthetic version of ourselves. I know that sounds unemotional and insensitive.” No, it sounds silly and childish. Transhumanism is the same old fantasy of personal immortality dressed up in science fiction drag, and that’s all it is. We are not going to the stars, we are not going to become disembodied minds in cyberspace, and we are not going to experience the Singularity. We simply aren’t going to have the knowledge, the technology, or the resources to spare, as climate effects, resource depletion, and population pressures multiply throughout this century. It’s far past time to put away such infantile escapist fantasies, roll up our collective sleeves, and prepare for a future that’s going to be much poorer, simpler, and, one devoutly hopes, wiser and more rooted in Nature than our deranged present.
Oh, and as for the phone? Don’t need to throw it away, I don’t own one (or an e-reader, or a microwave, or cable TV, or any number of beeping and flashing toys. I don’t have a car, either). Oddly enough, I manage to stagger through life quite well without constant electronic distraction. You should try leaving yours at home and going for a walk in the woods on a regular basis; you might be surprised what you’ll learn if you give the real world (by which I mean the natural world) a chance.
As a far-future concept the article theoretically makes sense. But I don’t see the struggle among the top-tier civilizations ending anytime soon, and until it does we will need to continue this tied-together knife fight. Right now it’s pretty much Russia, China, and the US. If the EU can get their act together they’ll be another contender for an economic victory, and India might be also depending on how and where they improve.
If Russia for example adopted your suggested policies, they’re effectively dropping out of the fight and hoping they’ll at least be ignored by the others on their rise to the top. When we see a victor or stalemate the rest of the world will get divided up – as it always has been done at every scale of human experience. I personally would rather that my culture dominates rather than Chinese, Russian, or Indian culture. We can fret about how ideally we can live in peace and harmony, but that’s unrealistic as a permanent equilibrium because of how cyclically terrible human nature can be.
The reality is, we each need to promote and improve our preferred civilization while spreading propaganda that we’re globally altruistic. Ideally for example the US would stop China stealing industrial and scientific secrets that we worked hard to acquire an edge in, somehow prevent them from taking advantage of knowledge they have, begin acquiring their assets at a low price, stop them from encroaching on ownership of our assets, and subjugate the country politically and economically while ensuring stability. We would have them produce products on Chinese soil using Chinese raw materials but in American-owned factories that pollute Chinese territory. We’d import those real goods while exporting virtual goods that cost us little to create – or which we can outsource while maintaining control and preventing the outsourcee from gaining enough self-sufficiency to challenge us. Consumption of real goods in the economic colony would be minimized to those necessary to sustain the export economy.
If we opt out of that struggle, we lose, as other civilizations won’t hesitate to press their advantage. And if the above paragraph sounds vile, villainous, evil – I would rather be in a power position able choose whether I want to do or not do that, rather than in the position of the powerless victim upon whom foreign lusts are slaked. Economic power is an engine of war as great and terrible as any battleship or marching army. Human history has proven conclusively that the defenseless are subjugated or kept as pets. Beware the unintended consequences of economic disarmament.
“Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.”
— The Late Philosopher and Economist Kenneth Boulding
Things are rapidly falling apart, and working on anything other than minimizing (I doubt it can be avoided) the coming crash is insanity. But that focus will require a fundamental change in thinking and beliefs that most people are apparently not capable of.
As a hobby futurist and person of 60 decades of experience, I am of the opinion that we are on the brink of economic collapse “again”, and world war. The rise in the US and Europe of Fascism and the destruction of democracy by the right wing oligarchs is on path to completion with little opposition. The planet is rapidly becoming un-livable and mass migrations of “un-wanted humans is just beginning, Our fresh water supplies are are depleting at a exponential pace. That’s the bad news I see. The good news “maybe” if any and the hope is that from those ashes a renewed world may arise with an expanding economy which could become a reality with the exploration and colonization of our solar system renewed efforts at eco restoration and clean energy.Also, the colonization Antarctica may become a necessity as the world warms up and the climate very far under becomes habitable. Who knows. For the near future humankind is literally on the brink of our own extinction. Some do not want to play this card, but why give false hope to a world that is not only “not” paying attention, but is pouring gasoline on the fire. Talk about the world economies shrinking seems to me like a frivolous topic compared to the reality we are truly facing, “in my old eyes”.
I think it is cycle. Grow and then decrease and grow again some time
Some good points but ultimately very Malthusian. We need to go into space, no piddling in near earth orbit but go to other planets. And recycle, not this sorting stuff to still put it in landfills. Molecular recycling. Which requires power: fusion. Commit and actually make it work. In the meantime, solar power from orbit or at least everyone on terrestrial solar. Electric cars with good solid state batteries. Get rid of Saudi Arabia.
We have options and we are not done growing, we just need to do it right.
Errr.. Economic growth and resource usage are highly correlated but causally they don’t need to be. This is like the oil industry claiming that growth being correlated to oil use means stopping oil consumption would halt growth. It is not inevitable that economic growth stops once we are fully sustainable. Yes we cannot grow resource consumption but resource consumption and wealth are not the same thing. Portable tape players used to be so heavy they were lugged around on your back, but you wouldn’t claim the owner was richer than someone carrying an mp3 player. It’s premature to put a limit on ingenuity to do more and more with the same materials. You may cite diminishing returns but that’s true only if you narrow your view to a particular product, as it matures yes progress seems to top out. However new products and industries keep emerging. Automobiles are a very old technology, and until recently each new model seemed to provide only very marginal improvements to the everyday experience of transport yet self driving cars are a wholly new emerging disruption.
not surprised, as look at the promotion of plant based food at the CES 2019, this means the future generation (currently 3 years or younger) will have to find an way to survive. it is too late for older people (i am gen x), I wish the best of luck for the future generations. lets make sure they have an planet to live.
You can’t stop growth or decay. You can stabilize it a bit. It is self-correcting. If we get a planet that is overpopulated, it will mean we have oppressed women. Don’t do that. Educate women and allow them freedom to choose, and we’ll have the kind of plant where we may get crowded, but it won’t be overpopulated.
My grandfather arrived in the United States the same year Edison put up the first power station in New York. It was direct current. He was 20 when the Wright Brothers had the first successful airplane. We heated with coal, and the British Navy was number one because they had a good supply of it around the world. Real technological innovation will continue to be the growth and change ag;ent that gets us out of the last screw-up and into the next one. If growth stops, we’re all dead.
What if we shifted to increasingly more services? Education, performing arts, therapy, locally grown food, better restaurants, massages, etc.
While I agree with your conclusion, I feel a deeper analysis is warranted in this case. The effects of institutions and the way we need to fundamentally need to change them is a broad topic, and while the burden does not fall on one author to address all of the issues, it is only more of a burden that we don’t have any other authors addressing this issue. Thank you for writing this, I hope there is more to come to this most fundamental issue of the 21st century.
Just another “My country is rich, all those poor countries can suck it” article.
Thank you for such a clear and straightforward piece on the subject. For anyone interested in additional information, I highly recommend the book “Doughnut Economics” by Kate Raworth.
The irony here is that new sustainable business models themselves will create more economic growth. The writer conflates the idea of economic growth with an increase in the use of resources. A lot of economic growth can occur without increased consumption, believe it or not. Consider solar power panels or wind farms. These are opportunities to build new energy generation plants that people will pay for – a new economic activity. Electric cars are another good example. Not all economic growth is *bad* – some can lead to reductions in resource exploitation. Consider the use of recycled materials. People will pay a premium to use recycled cardboard – they may pay 10-15 percent higher prices. This is an increase in economic activity if we just consider the dollar figures. Economic development has in fact involved several waves of such innovation. Often this new activity takes adjusting too – automation in manufacturing is a good example. Far more efficient but cost efficient, too.
Thank you for this. So far as I can tell, mainstream economics never addresses the question of whether unlimited growth is good—the only debates are over how to achieve it.